FarmPolicy

August 22, 2014

Ag Economy; Farm Bill; Biofuels; and, Immigration

Agricultural Economy

A news release on Friday from USDA’s National Agricultural Statistics Service (NASS) indicated that, “U.S. farmers spent $367.3 billion on agricultural production in 2013, a 2.0 percent increase from 2012, according to the Farm Production Expenditures report, published today by [NASS].

“Per farm, the average expenditures total $175,270 compared with $171,309 in 2012, up 2.3 percent [related graph]. Crop farms account for the majority of production expenditures in 2013. The average expenditure per crop farm totals $211,659 compared to $143,521 per livestock farm.”

Donnelle Eller reported on Friday at The Des Moines Register Online that, “The cost to farm last year climbed, with Iowa growers spending nearly $30 billion on expenses such as rents, feed, livestock and fuel, the U.S. Department of Agriculture said today.

“It was a 3 percent increase, or $835 million more than 2012, the federal government data showed.

U.S. farmers spent $7.2 billion more last year, with expenses rising 2 percent to $367.3 billion.”

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Graphs- July Crop Conditions, Cooler and Drier in Corn Belt

U.S. weather conditions in the key crop development month of July turned out to be both cooler and drier than normal this year in large areas of the Corn Belt.

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ERS: U.S. Farm Prices of Major Field Crops are Forecast to Decline for 2014/15

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From USDA’s Economic Research Service (ERS): Current USDA forecasts show declines in U.S. average farm prices for major U.S. field crops—corn, soybeans, wheat, and cotton—of 4 to 19 percent in 2014/15. For corn, soybeans, and wheat, this would be the second consecutive year of declining prices. Soybean prices are forecast to decline the most in 2014/15, based on an expected record U.S. crop, combined with ample supplies from Brazil and Argentina. U.S. corn prices are forecast to fall 10 percent in 2014/15, after a 35-percent decline in 2013/14, also based on a large U.S. corn crop forecast and competition from other exporters like Brazil, Argentina, and Ukraine. U.S. wheat prices are forecast to decline about 4 percent in 2014/15, despite the forecast for smaller U.S. supplies, due to adequate supplies from both traditional and Black Sea wheat exporters. Although smaller cotton crops are forecast for China and India—the top two global producers—a larger U.S. crop is expected to lead to a fifth consecutive year of rising global cotton stocks and a 12-percent drop in U.S. prices in 2014/15. Find additional analysis in the current ERS outlook newsletters: Feed Outlook: July 2014, Oil Crops Outlook: July 2014, Wheat Outlook: July 2014, and Cotton and Wool Outlook: July 2014.

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Ag Economy; Regs; Farm Bill; Biofuels; and, Immigration

Agricultural Economy

Joseph Serna reported yesterday at the Los Angeles Times Online that, “More than half of California is now under the most severe level of drought for the first time since the federal government began issuing regular drought reports in the late 1990s, according to new data released Thursday.

“According to the U.S. Drought Monitor report, in July roughly 58% of California was considered to be experiencing an ‘exceptional’ drought — the harshest on a five-level scale.

“This is the first year that any part of California has seen that level of drought, let alone more than half of it, said Mark Svoboda, a climatologist with the National Drought Mitigation Center, which issued the report.”

See also this graphical sequence of the three year California drought from Bloomberg News, as well as this excellent series of graphs from The New York Times, “Mapping the Spread of Drought Across the U.S.

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Policy Issues; Ag Economy; and, Regulations

Policy Issues

Benjamin Goad reported yesterday at The Hill Online that, “Legislation introduced Wednesday in the House would establish a tax on soda and other sugar-sweetened drinks, reprising a national debate over the role of government in shaping the diets of Americans.

“The bill authored by Rep. Rosa DeLauro (D-Conn.) would amend the Internal Revenue Code to establish an excise tax on the beverage. The revenue would be directed toward prevention, treatment and related public health research.”

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Farm Bill; C.O.O.L.; Ag Economy; Climate; and, Regulations

Farm Bill

A news release yesterday from the U.S. Department of Agriculture (USDA) stated that, “[USDA] today announced continued progress in implementing provisions of the 2014 Farm Bill that will strengthen and expand insurance coverage options for farmers and ranchers. The new Supplemental Coverage Option (SCO), available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility.”

The release explained that, “SCO will be available for corn, cotton, grain sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat in selected counties for the 2015 crop year. Producers should contact their crop insurance agents to discuss eligibility in time to sign up for winter wheat coverage. RMA plans to make SCO more widely available by adding more counties and crops. Information on SCO for 2015 winter and spring wheat is available on the RMA website at www.rma.usda.gov. Selected counties for other commodities will be released later this summer.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “USDA announced on Tuesday where farmers growing winter wheat would be eligible to buy the new Supplemental Coverage Option crop insurance this fall.

“SCO, created in the 2014 farm bill, is a supplemental county insurance that could cover a portion of a farmer’s deductible revenue on a countywide plan. A farmer buys the insurance as an enhancement to an individual policy.

Winter wheat farmers would effectively be the first ones who get the option of buying SCO for their 2015 crop. However, not every winter wheat farmer will get the option of buying the policy. Farmers in counties reflecting about 80% of the overall winter wheat acreage would get the option of enrolling. Almost all of Kansas, excluding a couple of counties, would be able to enroll, as would farmers in the western half of Oklahoma, southern and western Nebraska, parts of South Dakota, Colorado, Montana, Idaho, Oregon and Washington State would get to enroll, as well as farmers in sections of California, Arkansas, Missouri, Illinois, Ohio, Michigan and Wisconsin as well as a few counties in both North and South Carolina, New Mexico, Wyoming, New York and Pennsylvania. For a full map, go to http://dld.bz/…

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Regulations; Farm Bill; Ag Economy; Biofuels; and, Climate

Regulatory Issues

A news release yesterday from Sen. Kirsten Gillibrand (D., N.Y.) indicated that, “United States Senators [Gillibrand], Elizabeth Warren (D-Mass.), and Dianne Feinstein (D-Calif.) sent a letter today to Food and Drug Administration (FDA) Commissioner Margaret Hamburg requesting information about the FDA’s efforts to curb the overuse of antibiotics in food animal production.

“‘The use of antibiotics in food-producing animals must be reduced as part of the effort to preserve the efficacy of antibiotics,’ the senators wrote. ‘Research has shown that antibiotic resistant bacteria are most likely to develop when antibiotics are used continuously at low doses – the type of regimen used frequently in food animal production.’

“In their letter, the senators noted steps the FDA has taken to begin addressing this issue, including issuing guidance on inappropriate antibiotic use for growth promotion, calling for pharmaceutical companies to voluntarily remove these uses from product labels, and requiring more veterinary oversight of antibiotic use in food animals. The senators explained, ‘While these new policies are important first steps, we remain concerned that they may not be sufficient to effectively curtail the routine use of dangerously low doses of antibiotics for the duration of an animal’s life. . . . The benefits of this change will be negligible . . . if the same animals can continue receiving the same antibiotics at the same doses.’”

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Ag Economy; Policy Issues; Biofuels; and, Regulations

Agricultural Economy

Reuters writer Ros Krasny reported on Friday that, “Overall U.S. food inflation will remain near the historic norm in 2014, even as prices for meat and seafood are pushed higher by disease and widespread drought, the U.S. Department of Agriculture said on Friday.”

The Reuters article explained that, “But drought conditions in California and other states could further drive up prices of fresh produce and beef, the USDA warned.

“The agency forecast wholesale pork prices to jump by 10 percent to 11 percent in 2014, hurt by declining supplies after a virus has killed some 7 million piglets in the past year.

“Wholesale beef prices are forecast to jump by 8 percent to 9 percent in 2014, although rising imports are helping to offset some of the decline in domestic supplies.”

Friday’s article added that, “‘The ongoing drought in California could potentially have large and lasting effects on fruit, vegetable, dairy and egg prices, and drought conditions in Texas and Oklahoma could drive beef prices up even further,’ the USDA said.”

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Ag Economy; Biofuels; Farm Bill Issues; and, Appropriations

Agricultural Economy

Jesse Newman and Tony C. Dreibus reported in today’s Wall Street Journal that, “Tumbling corn prices [related graphs here, here, and here] are sowing fears that many U.S. farmers will suffer their first losses in years and the agricultural economy could face its first sustained slump in a decade.

Corn prices have plunged nearly 30% in the past three months to their lowest point since 2010 as near-perfect weather in the Midwest fuels expectations of a second consecutive bumper harvest. Prices of other crops have fallen sharply as well, with soybeans trading near 2½-year lows and wheat near four-year lows.”

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Bloomberg TV: Will Subsidy Triggers Amount to More Than Peanuts?

Categories: Farm Bill

July 23 (Bloomberg) — “Bloomberg’s Alan Bjerga reports on government subsidies to farmers, commodity prices and farm profits. He speaks on ‘Bottom Line.’”

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Farm Bill Issues; Appropriations; and, the Ag Economy

Farm Bill Implementation- House Ag Committee Chairman Frank Lucas

Ron Hays, of The Oklahoma Farm Report and Radio Oklahoma Network, spoke yesterday with House Ag Committee Chairman Frank Lucas (R., Okla.) about Farm Bill implementation issues.

An audio replay and summary of the Chairman’s remarks from yesterday can be found here, while an unofficial FarmPolicy.com transcript of the conversation with Ron Hays and Chairman Lucas is available here.

In part, Mr. Hays queried: “Let’s talk about crop insurance. I know this is kind of a sore point right now. The subcommittee that Chairman Mr. Conaway, under the House Ag Committee umbrella, had Michael Scuse in here just a few days ago [summary of that hearing here, related article from Politico here], it seemed like the request was pretty clear to Mr. Scuse and to USDA: we need APH, actual production history, for this upcoming crop season, starting with wheat growers when they put the crop in the ground here in a matter of a few more weeks. USDA doesn’t seem to have much intention to get this done.”

Chairman Lucas indicated that, “The response that USDA gave that day, and they’ve given to me personally from the top all the way to the bottom, is they have so many things going on they can’t implement the process. But for our listeners out there, actual production history adjustment is critical when you’ve been through the kind of drought that we’ve been through for multi years in our region.

“What I’ve asked of the Department, what Mr. Conaway made the request of the Department, what I’ve asked of the Secretary is if you can’t implement it for the whole country for this coming crop year, at least look at Oklahoma and Texas and Colorado, California and New Mexico, Kansas, the places that have suffered from the drought. If you can’t implement the whole thing, at least consider doing a partial implementation in the hardest hit areas.

Producers who have really suffered in recent years, this APH is the difference between having viable crop insurance for the coming year or not having viable crop insurance. And you’re exactly right, it’s going to be time soon to put the wheat in the ground in our region.”

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Policy Issues; Ag Economy; Regulations; and, Biofuels

Policy Issues

Tyrel Linkhorn reported yesterday at the Toledo Blade Online that, “Two years ago, farmers in the four-county Toledo metro area collected more than $10.5 million in direct payments from the federal government, a subsidy program that had become increasingly seen as a poor use of taxpayer money.

Starting this year, those payments disappear. In their place are federal safety-net programs that officials say will slightly reduce federal expenditures and better reflect the purpose of protecting the nation’s farmers in dire times.

“‘The fundamental political problem that direct payments ran into is a question of fairness,’ said Carl Zulauf, an agricultural economist at Ohio State University. ‘Is it fair farmers were receiving these payments when income was at record or near-record levels? We as a country decided that was not something we felt comfortable with.’”

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Ag Economy; Biotech; Policy Issues; and, CFTC

Agricultural Economy

Bloomberg writer Megan Durisin reported today that, “The U.S. soybean crop is in the best shape for this time of year since 1994, while corn ratings are the highest in a decade as mild Midwest temperatures helped boost the outlook for yields.

Seventy-three percent of the U.S. soybean crop was rated in good or excellent condition as of July 20, the U.S. Department of Agriculture said yesterday. Seventy-six percent of corn earned the top rating, the most for this time of year since 2004.

Soybean prices tumbled 17 percent in the past 12 months, while corn entered a bear market on July 3. A lack of heat through the end of the Northern Hemisphere summer will limit threats during later stages of plant development, according to Commodity Weather Group LLC. Bigger U.S. crops are helping to keep global food inflation in check, with the United Nations reporting a third monthly drop for prices in June.”

The article added that, “Soybean futures for November delivery fell 0.2 percent to $10.69 a bushel on the Chicago Board of Trade today. Prices reached $10.65 on July 11, the lowest for a most-active contract since Oct. 8, 2010. Corn dropped to $3.705 a bushel yesterday, the lowest since July 14, 2010.”

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Ag Economy; Policy Issues; and, Regulations

Agricultural Economy

Donnelle Eller reported late last week at The Des Moines Register Online that, “Farmland prices in Iowa ticked higher in the second quarter, pushing up 2.1 percent, based on sales, Farm Credit Services of America said today.

“Average farmland prices bumped up to $10,172 an acre, based on 109 farmland sales during April, May and June, the Omaha-based farm credit and insurance group said. A year earlier, the average value was based on 120 sales.

“Lower commodity prices led to reports in early 2014 of more cautious land buyers and declining farmland values. But several years of record-high profitability and low interest rates continued to positively impact the farmland market through June, the group said.”

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Regulations; Farm Bill; and, the Ag Economy

Regulations

DTN writer Todd Neeley reported yesterday that, “American Farm Bureau Federation President Bob Stallman said in a statement Thursday that the industry’s attempts to reach out to EPA officials have been unsuccessful on many of the issues of concern for agriculture in the proposed Clean Water Act rule.

“This comes on the heels of EPA Administrator Gina McCarthy’s trip to Missouri last week, during which she met with farmers and gave a speech in front of agribusiness representatives, in an attempt to begin to calm the waters on the proposed rule.”

The DTN article noted that, “The AFBF released to Congress a 16-page response Wednesday evening, to a July 7 blog written by EPA Acting Assistant Administrator Nancy Stoner, ‘Setting the Record Straight on Waters of the US,’ countering her point by point. In a news release Thursday, AFBF said that Stoner had made ‘numerous inaccurate and misleading comments’ about the proposed rule.

“One of the main concerns expressed by farmers and farm groups is that the 56 conservation practices listed in an interpretative rule released along with the larger CWA rule, essentially would narrow those practices exempt from the law by requiring farmers to follow Natural Resource Conservation Service specifications on those practices.”

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Ag Economy; Trade Hearing; Policy; and, Regulations

Agricultural Economy

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included several observations with respect to the U.S. agricultural economy.

The Chicago District indicated that, “The District’s corn and soybean crops made up ground after a late start to planting as favorable weather helped plants emerge more quickly than the five-year average. The consensus among contacts was that the corn and soybean crops were in excellent shape, but were unlikely to set records when harvested because of the late plantingsHog prices moved higher as disease affected supplies.”

The St. Louis District noted that, “Over 90 percent of the District’s corn, cotton, rice, sorghum, and soybean crops were rated in fair or better condition.”

The Kansas City District pointed out that, “The corn and soybean crops were in good condition overall, and improved growing conditions led to a drop in prices for both crops. Cattle prices continued to rise, but feeder cattle prices have recently increased much faster than fed cattle prices and narrowed margins for feedlot operators. The cumulative effect of reduced piglet numbers due to the swine virus and strong export demand for pork supported further gains in hog prices, even though pork production forecasts were raised due to heavier dressed weights and higher than expected slaughter in the second quarter.”

And, the Dallas District added that, “Widespread rains greatly improved prospects for row crops, especially cotton, but came too late to aid the Texas wheat crop, which is expected to be down 20 percent this year.”

A summary of all of the ag related notes from yesterday’s Fed report can be found here, at FarmPolicy Online.

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